How to pick the best energy deal for your small business

What you need to know about choosing the right energy deal for your business.

With a wealth of business energy suppliers and contracts to choose from, it can be difficult to decide which deal is right for you, but in this post we’ll explain the key things to look out for.

In a Federation of Small Businesses (FSB) survey in 2014, 70% of SMEs didn’t understand how to find the right tariff, often resulting in higher bills than necessary.

Finding the best energy deal: Contract types

Finding the right contract is imperative to getting great value for money. There is no one-size-fits-all when it comes to business energy and what may be perfect for one company, may not suit another.

While individual deals vary between suppliers, there are two main types of contract to choose from; fixed rate and variable rate.

Fixed rate

Fixed rate plans lock the customer into one ‘fixed’ rate for the duration of their contract. They will be charged the same amount per kilowatt of energy each month until the contract has been completed. The price per kwh will stay the same regardless of whether the price of energy rises or falls in the ever-changing market.

Fixed rate contracts are often ideal for small businesses that tend to use a similar amount of energy each month. By opting for a fixed rate, businesses can ensure that their bills don’t fluctuate so they can budget month on month for their outgoings. Gazprom Energy provides customers with greater stability on payments by offering longer term contracts - for electricity, contracts are available from 1 to 3 years and for gas, contracts are available for 1 to 5 years.

Variable rate

Variable or ‘flexible’ rate contracts are subject to market fluctuations and changes in third party charges so some monthly bills may be cheaper than others. Unlike fixed rate contracts, the customer won’t be charged the same amount of money per kilowatt, the rates and additional third party charges can vary – a bit like what happens with variable rate mortgages, where charges go up and down as the market prices change.

Variable rate contracts typically suit companies that really understand the energy they use and the way that their bills are calculated. These flexible tariffs allow them to buy the energy they need when they need it, in order to plan this around consumption highs and lows and take advantage of market rates. Though it’s more risky than a fixed rate contract, it works for many businesses.

Additional energy services

Although money-saving is often a priority, it’s not always advisable to go for the cheapest option. Some of the best business energy deals may cost a little more each month, but it’s worth looking at some of the additional services and support that’s offered as these can have longer term benefits, saving you time, resource and money.

• Online dataAn increasing number of business energy suppliers are beginning to offer their customers a series of online services that make it easier to track their usage and bills. By granting customers regular access to such data, this can enable businesses to act upon past usage to cut costs in the future.

• Personalised servicesIf you’re looking for a personalised service, you may appreciate an account handler. They will be able to assist you with any queries that you may have and can also help you to manage your account and energy usage.

• Customer reviews and satisfaction ratingsCustomer reviews can give you a great insight into which energy suppliers go above and beyond to help their customers. Gazprom Energy has well above industry customer satisfaction ratings; our 80% satisfaction rating shows that our customers are happy with what we do and a net promoter score of +26% demonstrates that they’re also highly likely to recommend our service to others.

Did you know our gas contracts offer fixed rates for up to five years?

A number of different elements make up an energy deal, and as a result, prices can vary depending on the particular contract and the various services that it includes. As a rule, the price you pay for business energy is made up of five main costs:• Wholesale energy • Operating • Distribution • Taxes and environmental contributions• Margin

Wholesale energy

This is the cost of the energy that is purchased on the wholesale market. Wholesale prices vary depending on the price for global assets such as coal and gas. Most suppliers conduct energy forecasts so that they can purchase their electricity and gas accordingly.

Operating costs

These are the costs that are incurred when keeping customers’ accounts running smoothly. This includes things like the maintenance of computer systems, staff wages, and energy.

Distribution costs

We factor distribution costs into our contracts – these include a number of charges incurred for transporting energy to the meter at each premise.

Taxes and environmental contributions

By law, energy suppliers are subject to compulsory government-imposed duties such as the Climate Change Levy, and other taxes. Some of these elements are include within contract rates or as separate charges on bills.

Margin

The amount of profit taken from tariffs is usually very low compared to other costs that are included in the calculation of prices. Much of the margin is reinvested into the business to improve services and keep customers satisfied.

The right energy deal

By finding the right energy deal to suit your business and embracing the various energy services available, you can ensure that you get great value for money, while minimising the amount of energy waste.